While the resolution laid out Congress’ spending priorities for FY 2018, it was more important for market players that it also unlocked a special parliamentary procedure that will allow Republicans to cut taxes with just 50 votes (rather than 60) and bypass Democratic approval in the process.

The resolution has a looong way to go before it actually translates to tax cuts, but for now the road just got smoother for the Trump administration’s tax reform plans.

Tax cuts are generally seen as inflationary, so it’s not surprising that Treasury yields jumped at the news. 10-year yields jumped by around 80 basis points and boosted the dollar across the board.

More losses for Kiwi

The New Zealand dollar lost a couple more pips to its counterparts as Asian session traders start to price in a potential shakeup in the Reserve Bank of New Zealand’s (RBNZ) mandate and processes.

If you recall, back in April Labour finance spokesman Grant Robertson shared that the party will instruct the RBNZ to include full employment on top of its inflation targets as its mandate.

Word around the hood is that RBNZ’s decision-making powers would also shift from the head honcho alone to a committee and will be required to publish policy meetings three weeks after each session.

Though Finance Minister Steven Joyce said the central bank already takes employment into account, the speculations surrounding major changes in the RBNZ’s helped drag Kiwi lower.

Major Market Mover(s):

USD

The Greenback was king of pips during the Asian session as traders priced in progress on Trump’s promised tax reform.

USD/JPY is up by 58 pips (+0.52%) to 113.14;
EUR/USD is down by 21 pips (-0.18%) to 1.1819;
GBP/USD is down by 46 pips (-0.35%) to 1.3111, and
USD/CHF is up by 55 pips (+0.56%) to .9813.

NZD

Kiwi took even more hits today thanks to concerns that the Labour party would make changes to the RBNZ’s mandate and generally prefer a lower Kiwi.

NZD/USD is down by 31 pips (-0.44%) to .6990;
EUR/NZD gained another 43 pips (+0.26%) to 1.6907;
AUD/NZD shot up by 11 pips (+0.10%) to 1.1224.

Every day, I will present to you my findings and daily commentaries on what recently happened in the economic arena, possible shifts in sentiment, economic events to watch out for, and their effects on currencies.

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